Notable Advancements in the Carbon Market

In recent times, notable advancements have emerged within the Voluntary Carbon Market (VCM) with a focus on enhancing market integrity through the adoption of standardized frameworks. These developments include:

The collaborative commitment from COP28 Presidency, the Glasgow Financial Alliance for Net Zero (GFANZ), and the Voluntary Carbon Markets Integrity Initiative (VCMI), manifested through a high-level round table convened on September 19, 2023. This gathering underscored the pivotal role of high-integrity VCMs in facilitating the transition towards net-zero emissions. Discussions emphasized the necessity for a comprehensive integrity framework within VCMs and underscored the significance of clear demand signals emanating from COP28.

The agreement reached on Article 6 of the Paris Agreement during COP26 in 2021 delineates a structured framework for nations to engage in voluntary cooperation toward achieving emission reduction targets and adaptation objectives. Through mechanisms such as the Article 6.4 Mechanism and International Transferred Mitigation Outcomes (ITMOs), this agreement facilitates international carbon trading while upholding environmental integrity and promoting cost-effective climate actions. Moreover, it safeguards against double counting of emission reductions and supports sustainable development.

The Science Based Targets initiative (SBTi) initiated an open consultation in 2023 concerning its Beyond Value Chain Mitigation (BVCM) Guidance Paper. BVCM entails mitigation actions undertaken beyond a company's value chain, including the procurement of carbon credits. This consultation aims to establish clear credibility benchmarks and best practices for transparency in BVCM efforts, thereby bolstering trust within the corporate sector towards VCM initiatives.

The introduction of the EU Carbon Removal Certification in November 2022 introduced a voluntary framework governing the independent verification of carbon removal activities. While this framework acknowledges activities focused on carbon removal, it does not extend certification to reduction credits. Currently under consideration by the European Parliament and the Council of the European Union, this proposal anticipates trilogue negotiations commencing in Q4 2023.

The announcement in June 2023 of the Integrity Council for the Voluntary Carbon Markets and the Voluntary Carbon Markets Integrity Initiative underscores a joint commitment to establishing an integrated market integrity framework for carbon credits. This initiative, unlike the EU Carbon Removal Certification, encompasses both carbon removal and reduction credits, thereby influencing operational procedures within registries and attributing distinct carbon credit attributes.

The International Carbon Reduction and Offsetting Accreditation (ICROA), administered by the International Emissions Trading Association (IETA), launched a revamped Accreditation Programme in March 2023. This program aims to align with evolving integrity demands within the VCM by introducing streamlined accreditation procedures and replacing the Executive Committee with a representative Accreditation Committee, better equipped to address the needs of accredited organizations.